The Wall Street Journal featured a story this week, Property-Tax rise Tiggers Backlash in Some Areas - (paid site $). According to this story, local governments have been raising taxes on residences to fill budget shortfalls. “Governments give a range of reasons for the increases, from gaps caused by cuts in federal revenue to declining commercial bases, rising health-care and pension costs and demands for more school funding.”
Particularly hard hit have been some desirable and growing suburban areas outside major metropolitan areas, where home prices and assessments have been on the rise. In a survey of such suburbs outside 12 major cities across the country, Runzheimer International, a management consulting firm based in Rochester, Wis., found that property taxes rose an average of 23.3% between 2000 and 2004. The survey, conducted for The Wall Street Journal, found that property taxes rose a whopping 56.9% in the San Francisco suburb of Danville, Calif., the single biggest jump. In the Washington suburb of Alexandria, Va., they jumped 53.1% over that span, while in Yorba Linda, Calif., outside Los Angeles, they increased 48.7%. Only two of the suburbs in the survey showed declines. Property taxes in Littleton, Colo., fell 1.6%, while those in Redmond, Wash., were down 0.5%.
For many homeowners, the increases have eaten into benefits they gained from President Bush’s cuts in federal income taxes. Mark Zandi, chief economist at Economy.com Inc., a research firm in West Chester, Pa., estimates that nearly a fifth of the income-tax benefit Americans are receiving from federal tax cuts this year is going to pay for higher property taxes. Mr. Zandi says he expects property taxes to continue rising “very rapidly.”
This trend is spawning a counter-reaction as home owners organize to cap, limit, or block tax increases, and even in some cases roll back taxes to earlier levels. Some of these measures would be similar to California’s Proposition 13, which fixed the tax basis for homes at the level of their last sale price.
